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Shogun
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Re: Understanding agencies that buy your loans once defaulted


AndySoCal wrote:

Collection agency can get a debt to collect on in one of two  ways.  The original creditor can assign your account to a collection agency. The original creditor still owns the debt. The collection agency receives a fee for colleting on the account. The other method  is the original creditor sells the debt to collection agency at a discount.  A collection agency of this type is called a factoring company. In either case all the FCRA and Fair debt collection practices act still apply..


A collection agency is someone who buys debt for the purpose of collection.  By definition a factoring company buys accounts that are not in arrears in an effort to boost cash flow for the OC.  The whole factoring company thing is an exploit the CAs have found in the posting to the CRAs that enable them to bypass certain aspects of the CRAs and allows them to appear as the OC. They are not a factoring company, they are a collection agency.  We know it, they know it, and even the CRAs know it.


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Cadillac-XTS
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Re: Understanding agencies that buy your loans once defaulted

+1

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audia4
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Re: Understanding agencies that buy your loans once defaulted


Shogun wrote:

 

This however could be a problem.  you signed papers, you agreed to the debt.  This has potential of restarting the clock.  Is there a judgement?  A judgement is also different and would procede past the 7 year mark.


I don't know if it is suppose to be a judgement or not. They granted the money owed (the courts), but it has never showed up on any of my 3 credit reports ever. How would I find out if it was a judgement?

 

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audia4
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Re: Understanding agencies that buy your loans once defaulted

It looks like they started this with the courts in 2007.  We went to informal court for mediation around April 2008. In Sept 2008 they reopened the case with the courts.

 

Mid 2009 they went back to court and it says: "GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT THE COURT FINDS THAT PLAINTIFF'S MOTION IS WELL TAKEN AND IS GRANTED. JUDGMENT IS GRANTED IN FAVOR OF THE PLAINTIFF"

 

So I guess this IS a judgement? But yet it never shows up on my credit report.

 

Then last month they posted "MOTION TO CORRECT PLAINTIFF'S NAME"

 

All of this information is still in my old name before getting remarried. (Which so is my credit report).

 

I believe these people actually aquired this back in maybe 2006. Of course I have never made a payment on it. So even if they did push it, wouldn't it be from that aquired date and it would be 7 years next year anyhow?

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AndySoCal
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Re: Understanding agencies that buy your loans once defaulted

Shogun,

 

The point is the debt can be bought a collection agency or the debt can be assigned to a collection by the OC.  I worked in a business where a colleciton agency that used collection agency. The accounts would be sent to the collection agency . As needed the business could recall the account for the collection agency. Not all debt is sold to  a collection agency.  A factoring company is a debt buyer it is there debt because they bought the debt..  Either the collection agency or the factoring company still falls under the Fair Debt Collection Practices Act.

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Shogun
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Re: Understanding agencies that buy your loans once defaulted

Yes but these are not factoring companies.  These are collection agencies that are filing a glitch to the CRAs in order to bypass some of the posting restrictions of CAs.  I agree that there are factoring companies, however purchasing those in arrears in not by definition a factoring company, they are a CA.


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RobertEG
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Re: Understanding agencies that buy your loans once defaulted

+!

The tool d'jour being used by some debt collectors to confuse the system, and unknowlegeable consumers!

 

A "factoring company" is a company that buys "accounts receivable" assets from a business seeking immediate cash, and then collects on those receivables from the consumers who owe the debt. Technically, a factored account is supposed to be an account that is NOT past due...the business just wants their money faster than the length of time normally allowed (30-90 days).

 

If a creditor has charged-off a debt, then they have already moved the receivable asset from their accounts receivable ledger.  That is what a CO is.  They thus have no account receivable to sell to a factor.

 

The distinction arises in credit reporting based on case law which considers a party who buys debt that is already delinquent as a “debt collector,” and thus subject to all of the provisions and requirements of the FDCPA.  Some want to avoid being subject to the FDCPA, so report as a "factor," implying that they are not subject to the FDCPA.

 

Thus, an apparently growing tactic that some CAs are using is to send info to the credit agencies that they are now a factoring company, and also a “creditor” based on purchase of the debt.  Some even go so far as to assert they have become an original creditor.

 

If delinquent at the time of purchase, however, they are not considered a creditor under the FDCPA, but rather a debt collector.

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AndySoCal
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Re: Understanding agencies that buy your loans once defaulted

I would disagree. with the distinction  if it is in delinquent or not.  Factoring company owns the debt the difference is how they acquire the debt. 

 

@RobertEG

 

The charge off of the account is the  accounting transaction that says they think they will be paid the moeny owed.  This adjusts the total accounts recievable to what  creditor thinks they will recieve payment for. The usual booking enty is something like credit accounts receivable for $$  and deebit the uncollectible accounts expense.  What happnes to these acocunts after they written off they will continue to try to collect on the account or they will sell the debit at a discount.

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Shogun
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Re: Understanding agencies that buy your loans once defaulted

You can put lipstick on a pig, but it's still a pig.  Yes, it does make a difference if it's delinquint or not.  So if I have an account that's been CO'd for 5 years and is purchased by a CA, they can just list themselves as a "Factoring Company", start adding 120 day lates to it, change the terms and the DOFD?  Well then let's just take this whole FDCPA thing and throw it out the window.  I say this because I've dealt with it first hand.

 

 Yes, there are "Factoring Companies".  But they are not these CAs.  It is an exploit, and they will continue to use it until they get called out on it by someone that has some authority over it.  If this was the norm, why hasn't it been that way from the beginning?  It's because one found it,  found it useful and now the rest are following suit.  I can assure you that Portfolio, Midland, LVNV, et al. are not out buying out accounts that are in good standing, they are out buying collections.

 

 


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RobertEG
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Re: Understanding agencies that buy your loans once defaulted

The distinction I was making did not relate to whether they are a factor, but rather whether they are subject to the FDCPA, regardless of whether they are of call themselves a factor.

 

Case law has clearly established that parties who purchase debt that is delinquent become subject in their collection activities to the provisions of the FDCPA.

So debt status is relevant to our concerns vis-a-vis dealing with them.

 


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